Thank you, operator. Good afternoon, everyone, and welcome to Acadian Timber's second quarter conference call.

With me on the call today is Malcolm Cockwell, Acadian's Chair and Interim President and Chief Executive Officer Before discussing Acadian's results, I will first remind everyone that in discussing our second quarter financial and operating, the outlook for the remainder of 2026 and responding to your questions, we may make forward looking statements. These statements are subject to known and unknown risks and future results may differ materially.

For further information on our known risk factors, I encourage you to review our news release and MD&A which are available on SEDAR plus and on our website at acadiantimber.com. I will begin by outlining the financial and operational highlights for our second quarter ended 06/27/2026.

Then Malcolm will discuss the progress we have made on our operations in Maine, and conclude with our outlook for the remainder of 2026. The second quarter is traditionally our lowest period of production of the year due to seasonal operational conditions.

However, volumes during Q2 26 were further impacted by elevated customer inventories following a highly productive winter in the region particularly in New Brunswick. Our performance in Maine improved as compared to Q2 2025.

We adjusted the scale of our internal harvesting operations to focus on improving efficiency and reducing operating costs. And we noted positive progress towards these goals.

For Q2 26, Acadian generated $1.3 million of adjusted EBITDA and $1.3 million of net income compared to $2.4 million of adjusted EBITDA and $2.7 million of net income in the same period last year, On a per share basis, net income was $0.07 compared to $0.15 in the same quarter last year. Revenue in Q2 26 was $14.6 million compared to $17.1 million in Q2 25.

Reflecting lower volumes partially offset by a 19% increase in the weighted average selling price driven by stronger softwood lumber markets higher fuel surcharges and longer hauling distances. Operating costs and expenses decreased $1.7 million from Q2 25 due to lower sales volumes, operational efficiencies in Maine that began taking effect during Q2 26 and lower selling and administrative costs partially offset by higher fuel adjustment costs and longer hauling distances.

Net income for the quarter reflected lower operating income higher interest expense and higher income tax expense, relative to Q2 2025. These impacts were partially offset by higher non cash fair value adjustments.

From a segment perspective, 38% as compared to Q2 2025 but were partially offset by an increase in the weighted average selling price, excluding biomass of 19%. The increase in the weighted average selling price was driven by stronger softwood lumber markets higher fuel surcharges and longer hauling distances.

Variable costs were similarly impacted by higher fuel costs and longer hauling distances. Total sales were $12 million compared to $14.4 million in Q2 25, and adjusted EBITDA was $2.1 million compared to $4 million In Maine, prehold sales volumes decreased 31% due to reduced harvesting activity, as internal harvesting operations were scaled down to focus on improving efficiency and reducing operating costs.

This was offset by a 16% increase in the weighted average selling price driven by a higher value product mix increased fuel surcharges and longer hauling distances as compared to Q2 2025. Cost of sales per cubic meter produced decreased 7% with the impacts of operational efficiencies, partially offset by higher fuel costs and longer hauling distances.

Total sales were $2.6 million compared to $2.7 million in Q2 25 and adjusted EBITDA was negative $400 thousand compared to negative $900 thousand last year. Turning to liquidity.

The company ended the quarter with net liquidity of $15 million including cash and available credit capacity net of required minimum balances related to long term debt. A portion of our long term debt totaling $45 million is scheduled to mature in March 2027.

It is our intention to refinance the debt prior to the maturity date. With that, I will turn the call over to Malcolm.

Thank you, Susan, and good afternoon, everyone. As Susan mentioned, I will first address how we have improved our internal harvesting operations in Maine.

Which we continue to view as a major challenge and a major opportunity. And then I will conclude with our outlook for the remainder of 2026.

With respect to Maine, I will start with some history. In early 2025, we established internal harvesting operations in order to overcome reduced regional harvesting and trucking capacity escalating harvesting and trucking costs, and a changing forest profile that generally requires modern cut length equipment.

The concept was good, but the results were poor. Throughout 2025.

Over the course of the second quarter of this year, we made significant changes to the scale and structure of these operations. Rather than striving to produce cubic meters of wood, we worked towards reducing the cost per cubic meter of wood being produced.

I will share a few anecdotes to illustrate our approach over the last few months. First, we scaled down the operations to the most productive group of operators and equipment.

And then improve the data flow from our equipment in order to address production bottlenecks. We increased the use of optimization software in those machines adjusted how different machines work together in our harvest block, and dialed in our approach to block selection to ensure that our crews are working in conditions that maximize their productivity within the constraints of our sustainable forest management plan.

In addition to these operational challenges, we reduced our fixed costs to ensure that they are appropriate for the scale of our operations in Maine, and we repositioned the business to rely on our internal harvesting capacity, where it makes sense to do so while utilizing third party contractors where their equipment or capabilities can provide the greatest operational advantage. Steps that were taken over the course of the second quarter are showing positive, boots-on-the-ground results.

And these steps are also beginning to show in our overall financial results. While Maine did not achieve profitability during the quarter, the year over year improvement in adjusted EBITDA demonstrates that these operational changes are progressing in the right direction.

We are laser focused on further improving these operations and expect to deliver stronger results through the balance of the year as compared to 2025. Turning to our outlook, Our overall outlook is positive.

For the rest of 2026. With respect to volumes and regional performance, in New Brunswick, we expect sufficient contractor availability to continue through the year.

In Maine, we expect the progress that I just discussed to continue through the remainder of the year as well. On the demand side, regional supply dynamics continue to be the primary driver of our markets.

In New Brunswick, the elevated customer roundwood inventories that constrained deliveries during Q2 have now returned to more normal levels, and we therefore expect sales to match harvesting capacity. Looking ahead, we expect sawlog demand to remain relatively stable in the near term.

However, pricing could continue to face pressure until end use markets improve. For pulpwood, both demand and pricing in New Brunswick and Maine are expected to remain soft until existing customers increase production and/or new pulpwood and biomass consuming facilities come online.

From a broader market perspective, we are encouraged by the underlying market fundamentals. Most macroeconomic indicators are positive, and the consensus forecast for US housing starts remain steady.

In addition, temporary and permanent curtailments at Forest Products facilities in other parts of North America are expected to support demand and pricing conditions for our customers in both New Brunswick and Maine. Overall, trends reinforce our confidence in the long term stability of the Northeastern forestry sector.

That said, there are still challenges. Tariffs and duties continue to impact many of our customers and the higher fuel costs are also putting pressure on their operations.

While we have not seen significant customer curtailments so far this year in New Brunswick or Maine, these factors are likely to continue impacting their production levels. And therefore their demand for the primary forest product that Acadian produces.

Turning to carbon credits, demand and pricing remained stable. The issuance of the next tranche of carbon credits from our current project has been delayed due to the transition to ACR's updated improved forest management protocol.

We now expect the registration of those additional credits in the second half of 2026 And importantly, we believe that the updated protocol will enhance the marketability of those credits going forward. Over the coming months, we will also continue developing real estate into a business capable of delivering steady, incremental EBITDA to complement our core operations.

In closing, on behalf of the Board of Directors, thank you for your continued support. And Susan and I are now available to take your questions.

Operator?

Hi, good afternoon. Thank you for taking my questions.

First, a couple of questions on renewables. It sounds like you have a new renewable energy lease in the quarter.

Can you tell us a little bit about that? And then couple of years ago, the team had highlighted the installation of a meteorological tower to collect wind data on your land in New Brunswick.

Are you able to share whether that data has unlocked any potential opportunities? And I guess, more broadly, are there any updates across your portfolio as it relates to renewable opportunities elsewhere?

Thank you.

Yeah. Thanks, Matthew.

With respect to the information that was included in this round, with a new option and lease being signed. I think the guidance we provide is similar to what we have said in the past with the fees and that in the short term, or the near term, income generation is modest, but it is still accretive with these auction payments.

So you could think of it as a doubling up of the expected timber income that 1 would generate for the next couple of years over a couple of thousand acres. Where it gets exciting is a couple of years down the road.

And I would handicap that at, say, 4 to 5 years from now. Where the economics get very favorable and into the 10x plus equivalent of the timber income that we would derive from those properties.

And then last thing for decades, if the projects are developed. So in summary, with respect to that announcement, small and modest to start, but we are excited about what it could become if it is successful over the next couple of years, and you expect to get updates from us on that.

With respect to the second part of your question about meteorological data in New Brunswick and what opportunities are coming up there, it is a little early, but I can say is that the data is useful. And we are actively engaged with some project proponents that we would like to work with.

And I would hope that we have got a more specific update to share with you in a couple of months on potential projects in New Brunswick.

Great. Thanks for the update there.

And then just pivoting over, could you talk a bit about the residential development project you are planning in Maine? It sounds like you are seeing some progress there.

Thanks.

Yep. Happy to speak to that too.

So with respect to that project, it is progressing on the timeline we have set for ourselves, which was aiming to be more or less shovel ready. By the end of this year and therefore in a in a in a revenue generating position in 2027.

That is occurring as we hoped it would. And we are seeing good support in the local community and with regulators.

Still some work to do, but it is it is going to achieve our objectives. In terms of the scale of that project, over the course of a number of years, it would be it would be material for the main business.

But more importantly, I would say that it is a it is a good example of what is possible with the Timberland portfolio that we have. A substantial portion of which is in proximity to the urban settlements and you know, appropriate for that kind of development.

Great. Thank you very much.

I will pass it back.

Okay. Thanks, Shannon.

On behalf of the board of directors, and the management team of Acadian, I would like to thank all of our shareholders, and other stakeholders for their ongoing support. And we will look forward to you joining us for our third quarter 2026 conference call on October 29.

Thank you.